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Tuesday 25 September 2018

18-285MR ASIC extends employee redundancy funds legislative instrument

ASIC has made a new legislative instrument which continues the effect of longstanding ASIC relief set out in ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150 until 1 October 2021.

An employee redundancy fund pools contributions from employers for employee redundancy payments.

ASIC Corporations (Amendment) Instrument 2018/825 ensures that the existing relief to employee redundancy funds relief from the managed investment and associated provisions in the Corporations Act 2001 (Corporations Act) continues.

This relief is from requirements to:

  • hold an Australian financial services (AFS) licence with appropriate authorisations
  • register the employee redundancy fund as a managed investment scheme, and
  • comply with the managed investment provisions in Chapter 5C of the Corporations Act and other associated provisions, including those relating to Product Disclosure Statements, ongoing disclosure requirements and the anti-hawking provisions.

The extension will allow for consideration of whether employee redundancy funds should continue to technically fall within the managed investment regime of the Corporations Act, particularly in light of proposed law reform to the Fair Work Act 2009 and Fair Work (Registered Organisations) Act 2009 concerning these funds.

Background

On 4 September 2015, ASIC released Consultation Paper 238 Remaking ASIC class order on employee redundancy funds: [CO 02/314] (CP 238), which outlined our proposal to remake [CO 02/314] with minor changes.

ASIC received four submissions in response to CP 238. All of the submissions supported employee redundancy funds continuing to be exempt from the managed investment and associated provisions in the Corporations Act, whether this was achieved by ASIC relief or law reform. Report 463 Response to submissions on CP 238 Remaking ASIC class order on employee redundancy funds: [CO 02/314] (REP 463) highlights the key issues that arose out of the submissions received on CP 238 and our responses to those issues.

In December 2015, ASIC extended the interim relief for employee redundancy funds by 24-months to sunset on 1 October 2018 on the basis that some further policy work would be undertaken by ASIC.

Subsequently, following the Royal Commission into Trade Union Governance, the Government has proposed legislating for specific governance and transparency obligations for the employee redundancy funds (see Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017).

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Last updated: 25/09/2018 12:00